This year’s maturing debt owed by the Canadian energy industry is the most on record for the fourth year in a row, according to the Financial Post, and is a whopping 40 percent higher than it was in 2019.
For many energy companies enduring the worst crisis to befall the industry in decades, this could be devastating, however, for those companies with strong credit ratings, there may be an out if they were to buy some time with higher rates.
Here are some of the companies with 2020 maturities and other near-term debt pressures:
Calfrac Well Services Ltd (CFW.TO): The company is a provider of specialized oilfield services. The Company operates through four geographical segments: Canada, the United States, Russia, and Latin America. The company deferred its June 15 interest payment on $432 million in debt due in 2026. It has a 30-day grace period before a default occurs.
Services include hydraulic fracturing, coiled tubing, cementing, and other well stimulation services. The Canadian segment provides fracturing and coiled tubing services to oil and natural gas exploration and production companies in Alberta, northeast British Columbia, Saskatchewan, and southwest Manitoba.
Bonavista Energy Corp (BNP.TO): Recapitalized in June in a debt for equity swap that resulted in the company going private. On June 30, 2020, G2S2 Capital Inc. – a privately held investment holding company, disposed of 10,000,000 common shares of Bonavista through the facilities of the Toronto Stock Exchange at a price of $0.05.
Husky Energy Inc (HSE.TO): C$698.3 million in medium-term notes due in mid-March have been repaid in full, a spokeswoman said, according to Reuters.
AltaGas Ltd (ALA.TO): Two 2020 maturities total around C$980 million (US$550 million and C$200 million). 2020 refinancings include one in April (C$594 million) and June (C$500 million).
BP Capital Markets (BP.L): Has a C$450 million maturity, due Nov. 9. In mid-June, BP said it would slash the value of its oil and gas assets as executives expect the coronavirus pandemic to significantly depress energy demand and speed the shift to cleaner power sources.
To that end, BP raised $12 billion of debt with equity-like features with the largest ever sale of so-called hybrid bonds, which place less of a strain on a company’s balance sheet because the principal never has to be repaid. This move comes just days after BP said it would take a writedown of up to $17.5 billion after cutting its forecasts of future energy prices.
Enbridge Inc (ENB.TO) (including subsidiaries): Five maturities between July and December. Four total C$750 million and one is worth $300 million. Reuters is reporting that Spokesman Jesse Semko said: “Our remaining maturities in 2020 are relatively small as we refinanced a significant amount in the first half of the year. We have ample liquidity.”
Canadian Natural Resources Ltd (CNQ.TO): Has one maturity in August worth C$1 billion. It announced on June 22 a $1.1 billion debt issuance, mainly to refinance short-term debt.
Total Capital Canada Ltd: One maturity of 750,000 euros expiring July 9.
Keyera Corp (KEY.TO): Maturities totaling C$109.4 million, due Sept. 8.
It will all come down to smaller producers with scant ability to sell assets or raise new debt or equity to end up facing a “refinancing wall,” said Victor Vallance, senior vice-president, energy, at credit rater DBRS Morningstar, according to CBC Canada. “You’re going to see more consolidation,” he predicted.
